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Eastar likely to file for court receivership following ruptured deal: transport minister

All News 22:17 July 29, 2020

SEJONG, July 29 (Yonhap) -- Low-cost carrier Eastar Jet Co. is believed to be seeking court receivership following a failed takeover deal by bigger rival Jeju Air Co, South Korea's transport minister said Wednesday.

"As Eastar is likely to file for court receivership, we are working on follow-up measures, together with the labor ministry," Kim Hyun-mee, the country's minister of infrastructure and transport, said during a parliamentary briefing that touched on critical issues related to potential layoffs of Eastar's 1,500 employees.

"There are various issues that should be taken into consideration, since Eastar is suffering a capital impairment," she added.

Last week, Jeju Air, the country's biggest low-cost carrier, backtracked from a deal to acquire the North Jeolla Province-based airline, citing rising uncertainties related to the COVID-19 pandemic.

"It's regrettable that we have decided to scrap the deal despite the government's intention to support it," it said in a statement. "But the decision was inevitable due to uncertainties amid the pandemic and the possible impact on shareholder value."

After the deal fell flat, the ministry urged Eastar to come up with a plan B to prevent layoffs as a condition for state support.

This file photo, taken July 1, 2020, shows Jeju Air and Eastar Jet B737 passenger planes at Incheon International Airport, west of Seoul. (Yonhap)

jaeyeon.woo@yna.co.kr
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